21:26 | Andrew Edgcliffe-Johnson and Taylor Nicole Rogers
Howard Schultz freezes the Starbucks share repurchase program, committing on the first day of his third term as CEO of the American Coffee Network to divert the resources available to branches and employees.
The decision comes against the background of the strengthening of the network’s incorporation in the domestic market, rising wages and raw material costs and potential threats to global growth following the freeze on operations in Russia and the corona closures in China.
Read more in Calcalist:
“The decision will allow us to invest more in our people and our branches, which is the only way to generate long-term value for shareholders,” Schultz said in a letter to employees, three weeks after the company announced Kevin Johnson’s retirement after five years as CEO and Schultz’s return. Temporary basis.
A few hours after his statement, there were reports that Starbucks had fired Layla Dalton, head of a shift in Phoenix, Arizona, a move that was described by the Starbucks union as “blatant revenge on the union’s leader.”
Casey Moore, a barista at a Starbucks branch in Buffalo, New York, said the employees who joined the union effort “feel hopeful but in all honesty, do not expect any change,” following Schultz’s return. “It’s disappointing to see how someone who heads a so-called progressive company is able to oppose a union,” she said, adding that the team is interested in being part of the decision-making process about channeling the resources available as a result of the stock repurchase freeze. “It’s great to see that they’re interested in investing in partners, but we need to be the decision makers in those investments,” she said.
Stabrax said Dalton absorbed people without their permission. She further stressed: “The interest of a partner in the union should not exempt them from our accepted standards.”
In a conference call with workers yesterday, Schultz said companies were “attacked in many ways by the threat of incorporation,” but added that he was more “pro-Starbucks” than “anti-incorporation.” Shares of Starbucks, which lagged behind the S&P 500 last year, closed at $ 88.09 on Tuesday, down 3.7%.
In 2020, Starbucks froze the repurchase of shares to focus on reducing the debt it took on the plague. Last October, Johnson announced a $ 20 billion plan to repurchase shares and distribute dividends over the next three years. The company reported last February that it spent $ 3.52 billion on a repurchase in the quarter ended Jan. 2, in the spirit of a wave of recent repurchases made by U.S. companies, which sought to incentivize profits by reducing the number of shares issued.
“Shareholders, customers, communities and the planet will benefit if the company works to share success with each of us for the overall success of all stakeholders involved,” Schultz said Tuesday. He announced the launch of “design meetings” with employees from all walks of life “to create together a future of mutual prosperity in an age of multiple stakeholders”, without specifying what exactly this would entail.
Schultz’s remarks echoed his attempts to revive Starbucks the first time he returned to the post of CEO in 2008 after warning at the time of “the commercialization of the Starbucks experience.” Who is looking for a new responsibility for business, “he noted on Tuesday.” As a Starbucks, we can choose to be part of the process, or observe from the side. “
A group of shareholders holding Starbucks worth $ 1.2 billion on Tuesday urged Schultz to consider the risks involved in “provoking” employees seeking unionization.
“Sitting at a table with employees will lead to smaller staff turnover and long-term success,” they said.
Dieter Weitzenger, CEO of SOC Investment Group, one of the shareholders, told the Financial Times that it was a “good initial signal that Schultz was referring to long-term fluctuations in the share price and not short-term ones.” He warned, however, that The CEO will be empty of content if relations with employees do not improve.
In a statement accompanying Schultz’s letter, the company noted that in his last four decades as CEO or chairman, Starbucks shares had climbed 21,000% between the 1992 IPO and his 2017 departure.
